The relocation of risk between the payer and provider market

In the year 2010 alone the US government spent over $2.6 trillion on healthcare developments and reforms which contributed to 18% of the GDP of the nation. There are other countries which spend less on healthcare as compared to US, United Kingdom (9% of the GDP), Germany (11.6% of the GDP). Despite spending so heavily on healthcare the US government lags on many processes of healthcare outcomes and quality. The inconsistency by the government shows that the opportunities present in the current market for healthcare, in terms of reducing expenditure and increasing the quality of output. The government needs to monitor the structural aspects of the healthcare system that majorly contributes to inadequacy and extravagant spending.

Due to the national and local arrangements to decrease cost and improve quality, a shift can be monitored in payment and delivery modes of the provider who now becomes liable to the cost and quality which has been a recent concern in the minds of providers. This new concept is termed as Accountable care - which states that providers (Physician and Hospitals) takes responsibility of the cost and quality which they deliver to their patients with specific payers such as Medicare or Blue Cross, Blue shield. Accountable Care organization (ACO) is a delivery model where a group of providers willingly agree to align themselves in terms of organizational activities, financial activities and clinical activities in order to share the tasks for cost and quality delivered for a specific patient population.

The major problem which could be witnessed due to ACO is the new form of capitation which would include a wide scale of maximum and minimum financial risk transfer from the payer to the provider. Shared Savings is the most common expedition in todays migration from Fee For Service (FFS) the main purpose of introducing the shared savings is as followed:

Better care for patients.

A reduction in growth in Medicare parts A and B expenditure.

Good health to the general population.

There are other modes as well Bundled Payments followed by Episodic Payments and at the full end of the spectrum is Global Payments which is the most transfer of financial risk from the payers to the providers.

The healthcare IT market has been witnessing many developments with introduction of healthcare reforms in both developed as well under developed economies. IT implementation has streamlined many processes in hospitals with the introduction of hospital procedure such as billing, medical imaging and diagnostic information. However the healthcare IT market is yet to see many developments as there is a rise in the initiatives which has been taken by the government. The North American healthcare IT market was valued at $21.9 billion in the year 2012, says a report North America Healthcare IT market - forecast till 2017 published by MarketsandMarkets, a Texas based Research and Consulting firm.